The bill, H.326, will loosen restrictions on the level of assets families can have while qualifying for benefits programs run by the Department for Children and Families.
It is an attempt to lessen the impact of the so-called benefits cliff — where subsidy recipients abruptly lose state benefits when their income increases to the next income bracket.
“We know that savings is an important strategy out of poverty and sets good policy because it encourages financial stability,” Scott said.
Under the new law, applicants for Reach Up will qualify if they have assets of $9,000, up from $2,000 under current law. Retirement accounts and qualified child savings accounts will not count in determining whether someone qualifies.
“With these changes, families will not have to spend down their assets to qualify for Reach Up,” Scott said.
The new law also changes eligibility requirements for child care assistance subsidies so that income deposited into a child’s higher education savings account will not be considered.
Rep. Brian Keefe, R-Manchester, the bill’s lead sponsor, said it is a “modest” measure.
Keefe decided to pursue the change in policy after he heard from a single mother in his district who turned down a raise at work because the money would have put her in a different income bracket and she would have lost more in cuts to her benefits than she would have gained.
“And so she left that money on the table,” Keefe said.
Many of the people who will benefit from the change in state policy are working mothers who use child care subsidies, he said.
Ken Schatz, commissioner of the Department for Children and Families, estimated that dozens of people will benefit from the change in the law.
He said there will likely not be an impact on the state budget. Reach Up utilization has been decreasing recently, and DCF expects that the change in the program will help more people save money and work their way off the benefit.